The U.S. Energy Information Administration (EIA) is an official provider of energy-related data and analytics. Initially created by the Federal Energy Administration Act of 1974, the EIA specializes in the collection, analysis and dissemination of energy industry data at the federal level. Producers, traders and government officials view the EIA as a leading authority on the current state of global energy.
Mission And Products
Dating back to the oil crises of the early 1970s, the modern international energy environment has proven to be periodically turbulent and volatile. Wars, acts of terror and the worldwide importation/exportation of energy products have all fueled demand for an official data reference. The EIA attempts to satisfy this need within the framework of their mission statement:
"The U.S. Energy Information Administration (EIA) collects, analyses, and disseminates independent and impartial energy information to promote sound policymaking, efficient markets, and public understanding of energy and its interaction with the economy and the environment."
Due to the complexity of the global energy markets, a comprehensive study of production, consumption and fuel refinements is of paramount importance. In the spirit of full disclosure, the EIA was created by the U.S. government to provide impartial energy-specific data for public and governmental use. In doing so, the EIA drives to achieve their stated objectives:
- Sound Policy Making: The extraction and trade of energy products is a truly global enterprise. The EIA aids in the crafting of strong domestic and foreign policies by producing and releasing high quality information.
- Efficient Markets: The pricing of energies on both the futures and spot markets are relative to the evolving supply/demand relationship. The EIA furnishes market participants with data designed to address ongoing concerns and predict forthcoming trends.
- Public Education: Through the promotion of energy-specific literacy, the EIA cultivates a public informed on key issues relevant to society as a whole.
- Environmental Impact: The extraction of commodities and production of energy is an environmentally exhaustive process. EIA data provides a backdrop for responsible resource management and the reduction of excessive environmental impacts.
To best address all facets of their stated mission, the EIA offers a variety of informational products on a daily, weekly, monthly or yearly basis. These reports or briefs provide current data, analysis or future projections to energy industry participants. The following are a few of the most widely referenced EIA products:
- Today In Energy
- Weekly Petroleum Status Report
- Weekly Natural Gas Storage Report
- Gasoline And Diesel Fuel Update
- Monthly Energy Review
- Annual Energy Outlook
- International Energy Outlook
EIA reports and data are released for consumption via email, 11 RSS feeds and the official website. Energy traders, producers, researchers and media outlets frequently reference EIA materials to fulfill their data needs.
The EIA is headquartered in Washington D.C. and secures funding through annual Congressional appropriation. For 2019, the EIA's budget consists of US$125 million to conduct essential functions, such as "core statistical and analysis activities." Although operations are subject to federal budget constraints, the EIA conducts business independent of government influence and oversight.
Four primary offices make up the EIA and are responsible for a collection of delegated tasks. As stated by the EIA, the official duties of each office are as follows:
- Office Of Resource And Technology Management: "Directs a variety of centralised and cross-cutting corporate business activities including the EIA's independent information technology infrastructure."
- Office Of Energy Statistics: "Conducts a wide range of survey and statistical methods related to: energy consumption and efficiency; nuclear and renewable energy; oil, gas, and coal supply; petroleum and biofuels."
- Office Of Energy Analysis: "Analyzes energy supply, demand, and prices including the impact of financial markets on energy markets; analyses impact of policy; ensures that models and projections meet the highest standards."
- Office Of Communications: "Oversees a comprehensive energy information dissemination program that provides high quality information in a timely manner for the EIA's public and private audiences."
Among the operational characteristics of the EIA is an extensive bureaucratic infrastructure. Each of the above offices are made up of multiple divisions (also referred to as "offices"), each tasked with a specialised function that contributes to the overall mission. In total, the EIA is made up of four primary offices and 16 secondary divisions.
The EIA holds its keynote event, the EIA Energy Conference, once per calendar year. Industrial leaders, government officials and academics attend to discuss current issues and challenges facing global energy.
Impact On The Markets
EIA research and analysis has a strong impact on the pricing of energies, both commodities and refined products. Crude oil, natural gas, gasoline and heating oil are four markets that are regularly impacted by EIA data releases. Related financial instruments such as contract-for-difference (CFD) or futures products often experience heightened volatility and participation upon the release of official data sets.
In the trade of commodities, the following reports impact crude oil and natural gas on a weekly basis:
- Weekly Petroleum Status Report: The Petroleum Status Report is issued by the EIA every Wednesday at 10:30 AM EST on non-holiday weeks. It is used primarily to address current U.S. supply figures on a regional and aggregate basis. It also includes crude oil import/export data, fuel prices and production levels of refined products.
- Weekly Natural Gas Storage Report: The Natural Gas Storage Report is put out by the EIA every Thursday at 10:30 AM EST on non-holiday weeks. It provides an in-depth look at American natural gas stocks on both a regional and aggregate basis.
These two scheduled economic events can have a dramatic impact on the price action facing a variety of popular energy products. Spikes in volatility and participation levels are frequently extreme following public release of the data. West Texas Intermediate (WTI) crude oil, North Sea Brent (Brent) crude oil and Henry Hub natural gas are a few of the commodity futures products regularly affected. Related energy CFDs such as NATGASUSD (Henry Hub Natural Gas), UKOIL (Brent) and USOIL (WTI) also exhibit pricing sensitivity to timed EIA data releases.
For refined products, RBOB gasoline and NY Harbor ULSD futures often experience substantial value fluctuations in relation to EIA statistics. Due to the fact that each is technically a derivative of crude oil, correlations between the pricing of energy commodities and refined products can be strong.
The EIA is a leading global authority on all things energy, from commodities to refined products. Data and analytics produced by the EIA for public consumption often sway market sentiment. Scheduled reports regularly impact the pricing of energy-related products on a weekly, monthly and yearly basis. In the event one is engaged in the energy markets, staying abreast of the EIA's reporting schedule is a necessity.
Russell Shor (MSTA, CFTe, MFTA) is a Senior Market Specialist at FXCM. He joined the firm in October 2017 and has an Honours Degree in Economics from the University of South Africa and holds the coveted Certified Financial Technician and Master of Financial Technical Analysis qualifications from the International Federation…